Wall St. and Business Wednesdays: Chapman sentenced to 90-month prison term

Nathan A. Chapman Jr., the son of a railroad worker and a seamstress who worked his way to the top of Maryland's financial and political society, was sentenced in federal court in Baltimore Monday to 7 1/2 years in prison on charges including defrauding the state's pension system.

Chapman, who was also convicted this summer of stealing from his own companies and lying on tax returns, was ordered to pay more than $5 million in restitution.

Immediately after the sentencing, Chapman's lawyers filed a notice of their intent to appeal.

"Clearly, we're very disappointed with the sentence," said Chapman's lawyer William "Billy" Martin. "We know that, from the beginning, Mr. Chapman did not attempt to defraud any citizens of this state."

Throughout Monday's hearing, Chapman maintained the same serious, attentive composure he had shown during his nine-week trial. He also addressed the court -- adding his voice for the first time to proceedings that have been filled with tales of his business decisions, his political connections and his romantic relationships.

"I never intended to defraud anyone," Chapman said, his voice even, shoulders straight, chin slightly lifted. "I never thought in a million years that I'd end up in a courtroom."

He thanked the judge for the "respect you've shown me in this courtroom" and said he believes in the justice system but disagrees with the outcome in this case. He said he was looking for ward to the "other side" of this process.

"With the crucifixion, there will be resurrection," he said.

Chapman, 47, was once considered one of the country's top African-American investors and moved in the state's highest political circles. He was close with former Gov. Parris N. Glendening, who helped him become chairman of the University System of Maryland's Board of Regents.

The prison sentence handed down by U.S. District Judge William D. Quarles Jr. falls between the 12 or more years sought by the prosecution and the 3 1/2 years requested by defense lawyers.

It is the same sentence given to Baltimore currency trader John M. Rusnak, who pleaded guilty in late 2002 to a banking scheme that cost Allfirst Financial Inc. $691 million.

The jury in Chapman's case found that he had caused a loss to the Maryland state pension system of just more than $5 million.

Martin said the two cases should not have equivalent sentences. "This is not a Rusnak case," he said. "From the beginning, the government has made this the case of the century. It is not the case of the century."

Assistant U.S. Attorney Jefferson M. Gray said in court that Rusnak would have gotten more time if he had not pleaded guilty and cooperated with the government. Gray also said that Chapman "has caused a serious loss of trust in the pension system."

After seven weeks of testimony this summer, a jury found Chapman guilty on Aug. 12 of 23 counts of fraud and tax evasion. Prosecutors said that Chapman used the pension system, a portion of which he was in charge of managing, to illegally prop up the stock of his own struggling company.

Defense attorneys argued that Chapman did not personally benefit from shareholders' losses and should not be penalized as if he had. They also asked the judge to give Chapman a shorter sentence so he would be better able to care for his three teen-age daughters, his elderly mother and his wife, who has cancer.

Nathan and Valerie Chapman have separated, but he helps pay for her medical care, his lawyers said. She wrote a letter to the judge asking for leniency.

"He has continued to give us as much money as he can, he drives our daughters to and from school every morning, and I know he will continue to do everything possible to support us," she wrote. "But he won't be able to do anything as long as he is in prison. If I die, they will have no one to pay for their care."

Quarles said her plea was "touching" but did not necessarily support her estranged husband's position.

"Of all the suffering she's done, a huge, huge part of it is directly from his own conduct," the judge said. Prosecutors say Chapman stole from his publicly owned companies to support his extramarital affairs.

But Quarles agreed to the lesser sentence for Chapman due to "extraordinary family circumstances" -- one of the exceptions allowed by the federal sentencing guidelines.

Monday, Chapman left the courthouse with his lawyers. His attorneys have asked Quarles to let Chapman remain free while his appeals are pending.

The judge said he will rule on that request after hearing from prosecutors.